American International Group Inc. Chairman Edward Liddy said today the company is working to reorganize its core businesses into “clearly separate, independent” companies “worthy of investor confidence.”
He made his comments during a conference call following an announcement that AIG, New York, lost $100 billion in 2008.
Around the same time, the U.S. Treasury Department and the Federal Reserve Board issued a statement discussing their decision to put more funds into AIG and restructure their investment in the company to make it easier for AIG to survive.
Officials warned that more aid for AIG still might be needed.
During the earnings conference, Liddy acknowledged that making AIG a stable company and eliminating the need for government support will be difficult because of the size of the company and the poor economy. “The measure of the health of the investment-sensitive portion of our industry is down 52% year-to-date as of last Friday,” Liddy said. “That’s two months. And it is down over 70% since I became CEO of AIG in late September.”
AIG is aware that, despite the challenges, it must move quickly if it wants to prevent further erosion in the company’s market share, Liddy said.
“The marketplace is a pretty crummy place to be right now,” Liddy said.
Liddy also talked about giving the government a stake in American Life Insurance Company and American International Assurance Company in an effort to pay off much of the $38 billion it owes the Federal Reserve Bank of New York under a credit facility.
“This will allow AIG to tap the intrinsic value of its insurance companies, to repay a portion of government credit facility,” Libby said. “It will accelerate AIG’s restructuring plant and position these businesses as independent companies.”
AIG Chief Financial Officer David Herzog said during the conference call that most of the funds AIG has received from the Treasury and the Federal Reserve Board since the government took 79.9% of the company in exchange for $85 billion in cash Sept. 16 have gone to other companies.
“Most of the funds coming into AIG were turned over to other institutions, which benefited the entire financial sector,” Herzog said.
Earlier, Liddy discussed the scope of AIG’s connections with the world financial system.